Standing Committee D

[Mr. Jonathan Sayeed in the Chair]

Horserace Betting and Olympic Lottery Bill

Richard Caborn: I beg to move,
That— 
 (1) during proceedings on the Horserace Betting and Olympic Lottery Bill the Standing Committee shall meet when the House is sitting on Tuesdays and Thursdays at 9.30 am and 2.30 pm; 
 (2) 8 sittings shall be allotted to the consideration of the Bill by the Committee: 
 (3) the proceedings shall be taken in the order shown in the Table below and shall (so far as not previously concluded) be brought to a conclusion at the time specified in the second column of the Table.

TABLE  Proceedings  Time for conclusion of proceedings   Clauses 1 to 10, Schedule 1, Clauses 11 to 13, Schedule 2, Clause 14  11.25 a.m. on Thursday 22nd January  Clauses 15 and 16, Schedule 3, Clause 17, Schedule 4, Clauses 18 to 20  5.00 p.m. on Tuesday 27th January   Clauses 21 to 29, Schedule 5, Clauses 30 to 38, Schedule 6, Clauses 39 to 42, remaining proceedings on the Bill  5.00 p.m. on Thursday 29th January

Good morning, Mr. Sayeed. I think this is the first time that I have been under your chairmanship. I have no doubt that the legislation will be expeditiously taken through Committee. We believe that the timetable gives the Committee ample time to consider the Bill and any amendments to it.

James Paice: I, too, welcome you to the Chair, Mr. Sayeed. I also welcome Mr. Illsley, in his absence. We do not have any qualms about the programme motion, not least because it was agreed with us all last night. As the Minister rightly said, there is probably plenty of time to deal with things.
 The Bill is slightly unusual in that it involves little party politics and few issues of party principle. My colleagues and I come to consider the Bill with the interests of horse racing and the Olympics at heart, and we will address it in that context. Certainly, when it comes to the first two parts of the Bill, which relate to horse racing and which I shall handle on behalf of the Opposition, the purpose of most of our amendments, and of what I hope will be a sensible debate, will be to persuade the Government simply to include measures that they have already agreed verbally and made announcements about. There are one or two other issues of principle, which we shall come to in due course, but I want to stress that overall we welcome the Bill and want it to go forward. There are some areas where improvements could be made and I look forward to constructive consideration in Committee.

Don Foster: I, too, welcome you to
the Chair, Mr. Sayeed. The Minister's proposal for the programme for our sittings already has the support of the hon. Member for South-East Cambridgeshire (Mr. Paice), and the Liberal Democrats are also happy to support the motion. It sets out a reasonable timetable for dealing with some quite important and complex issues. Judging from the debate on Second Reading, there appears to be a fair degree of support on both of the House for the various measures. On Second Reading, however, the hon. Gentleman suggested a number of concerns, some of which relate to omissions and issues that should be covered. We have similar concerns, and there are some points of detail that we wish to explore with the Minister.
 The programme motion, however, gives us ample time for deliberation. My wife, the current Mrs. Foster, will be disappointed with the show of unanimity. [Interruption.] I see that the Committee has at last woken up and twigged what I have just said. When I have been successful in obtaining major concessions from the Government in other Committees on which I have had the pleasure to serve, it has been my custom to write a letter to my wife explaining how successful I have been. Even small concessions have led to at least a postcard to the current Mrs. Foster. My fear is that, given the fair degree of support on all sides and the lack of controversy, she will not be anticipating much correspondence from me. 
 Question put and agreed to.

Jonathan Sayeed: I remind the Committee that there is a money resolution, copies of which are available in the Room. I also remind Members that adequate notice should be given on the tabling of amendments. As a general rule, my fellow Chairman and I do not intend to call starred amendments, including those that the Committee may reach during an afternoon sitting.Clause 1 Dissolution of the tote

Clause 1 - Dissolution of the tote

Don Foster: I beg to move amendment No. 49, in
clause 1, page 1, line 8, at end add— 
 '(3) The Secretary of State will require an independent valuation of the Horserace Totalisator Board on the appointed day. 
 (4) The successor company may pay a sum of no more than 50 per cent. of the independent valuation under sub-section (3), providing all future operating profits are used to contribute to racing. 
 (5) Any further assets acquired by the Horserace Totalisator Board between an independent valuation under sub-section (3) and the transfer of its assets to the successor company must be subject to an independent valuation and added to the sum agreed under sub-clause (4).'.
 I said a moment ago that there are several areas in which the Conservative party and my party believe we are well acquainted with the Government's intentions, but that those intentions do not appear in the Bill. That is the basic principle of the amendment. 
 The Government have made their intentions towards the Tote very clear. They have appeared among the 2001 manifesto commitments, in numerous speeches by the previous and the current Home 
Secretary, and most recently on Second Reading when the Minister for Sport and Tourism said: 
''Hon. Members asked about the sale of the Tote. We set up the shadow trust to answer those questions, and it has had a dialogue with the Treasury. The Tote will be sold in the normal way for an asset of the Government. An independent review will be held and a price set.''
 He continued by explaining why he believes it important to set a fair price. That is also important to our deliberations. He said: 
''If we fail to set a fair price for the Tote, we will run into various difficulties. For example, the bookmakers will complain to Europe about state aid and unfair subsidies that could distort the marketplace.''
 The Minister explained that the normal procedure for the sale of Government assets will be adopted for the sale of the Tote. He also explained that, once a valuation has been carried out, it is anticipated that the Government will receive 50 per cent. of that value, with the new racing trust paying the other 50 per cent. to the Government. He confirmed that belief on Second Reading: 
''On the 50 per cent. figure, the Government believe that there are two legitimate stakeholders in the Tote: the racing industry and the taxpayer. It is as simple as that.''—[Official Report, 8 January 2004; Vol. 416, c. 492–93.]
 From what I have read out, the Government's intentions are clear. They intend to sell the Tote to a racing trust—an issue that we shall debate later—but for a racing trust or anyone else, the procedure for sale will consist of an independent valuation at the time of sale, and the Government will expect to receive about 50 per cent. of that with the trust paying 50 per cent. to the Government for the assets. That being the case, we believe that it should be included in the Bill for all to see, to ensure that everyone is clear about the procedure. In doing that, we have to take account of a number of concerns that would exist were it not to be included. 
 The Government have made it clear that they intend to sell the Tote to a racing trust because they believe that that will be in the best interests of racing. That being the case, the racing trust will not have financial resources of its own and it will have to fund that acquisition by borrowing against the Tote's future cash flow. The Government must therefore ensure that debt funding against the Tote's cash flow is such that it ensures that the trust can pay for the Tote and do so in a way that provides a sustainable interest burden. 
 The Tote's resulting capital structure must be sustainable and not over-leveraged. Recent examples such as National Air Traffic Services and Railtrack serve as useful precedents of the dangers of overextending viable businesses. We must ensure that whatever action we take avoids embarrassment to the Government and the racing trust. In covering the additional leverage that the Tote may be able to support, it is important to appreciate that the Tote already carries a substantial net debt, estimated to be approximately £40 million for the current year. 
 At a later stage, we shall no doubt touch on issues relating to some problems the Tote has with its pension fund. We must therefore ensure that we get the price right, so that there is not too great a burden 
on the Tote. There must not be any impact on the current distribution to racing. After all, that is why we are going through the exercise. Any reduction in the Tote's contribution to racing, or in any of the money that it distributes, could seriously jeopardise some smaller courses, leading to closure, job losses and related impact on the local economy. 
 The other reason that I believe we have to be particularly careful is that it is obviously the Government's intention, which we support, for the Tote to grow and develop so that it can make further contributions to racing. The Tote operates in an extremely competitive environment with competitors that are well capitalised and which actively invest their resources to diversify and grow their businesses. The new-style Tote will be launched into a difficult, competitive climate. 
 Getting the price right is vital, and it is also right that we ensure that we are fair to taxpayers as well. Therefore, we fully support the Government's proposal for the procedure. There is a debate as to whether the figure should be the full 50 per cent. or less than that, primarily reflecting the benefit of the exclusive licence that the Tote will have for seven years under Government plans, although we shall debate that later. 
 Believing that to be the right procedure, we also believe that it should be included in the Bill, which is what amendment No. 49 would do by adding three subsections to the clause. The first states: 
''The Secretary of State will require an independent valuation of the Horserace Totalisator Board on the appointed day.''
 That is precisely what the Government have said is their intention. Secondly, the amendment states: 
''The successor company may pay a sum of no more than 50 per cent. of the independent valuation under sub-section (3), providing that all future operating profits are used to contribute to racing.''
 That, too, is the Government's intention, clearly stated by the Minister. Finally, as the Tote is going through the exercise of purchasing additional assets, we must ensure that such assets are taken into account. That is why we have added the third new subsection. 
 Although I believe that the procedure adopted by the Government is the correct one, and therefore it should be clearly stated in the Bill, I accept their argument that the racing trust should not be named there. We shall debate the issue later, but I hope that the Minister has noted that we have not specified the racing trust in the amendment, because we acknowledge the importance to the Government of being able to negotiate in a way that does not tie their hands. They will want to conduct negotiations without there being only one potential purchaser. 
 We believe that the amendment is the right way forward. I hope that, if there is a clause stand part debate, I shall have an opportunity to raise a couple of additional points on the issue with the Minister. As they are not directly relevant to the amendment, with your agreement, Mr. Sayeed, I shall leave them till later in our deliberations.

Richard Page: The Minister will remember that on Second Reading a number of hon. Members asked for a Committee stage, as it would be a golden opportunity for him to explain how this part of the purchase of the Tote would unravel and give us a clue as to the Government's thinking.
 I support the sentiments behind the amendment moved by the hon. Member for Bath (Mr. Foster), but some aspects of its practicalities worry me, such as the method of valuation. We should consider the complexities and difficulties that lie behind the calculation of such a valuation. The hon. Gentleman refers to an ''independent'' valuation: any valuer would want to know the ground rules before moving into a valuation. 
 In relation to the process of valuation, the history of the Tote should be borne in mind. We know that the Tote has not given the Government any money directly in the form of a licence fee over the past 76 years, but the Government in turn have given the Tote an effective monopoly for 76 years and have enabled a substantial pool betting system to emerge. The Government could have charged a licence over the years if they had changed the law, but, particularly over the past 10 years, the Tote has put a sizeable amount into racing—about £100 million—which could almost be regarded as a licence fee. If the Tote had not put that money into racing, racing would have suffered. The Government's substantial revenues from various aspects relating to racing, particularly betting, would have been diminished, because extra support would have to have gone into racing. The Government should take that into account. 
 With the acquisition of the Tote, the Government will be taking it over, but, although the Tote is owned by itself, it has a notional value at present. The argument could follow that this value is greater than any value that the racing trust would have to pay the Government, because the racing trust will pay a licence fee to the Government. One could almost work out that the Government should give the racing trust money to take over the Tote, because it will pay a licence fee. I do not advance that too seriously, as I cannot imagine the Chancellor of the Exchequer accepting such a fair and honest evaluation of the situation. My point is that it is very difficult to reach an independent valuation on the Tote. 
 The hon. Member for Bath touched on the matter. We have the information that a seven-year licence will be granted. I sincerely hope that, when my hon. Friend the Member for South-East Cambridgeshire introduces the appropriate amendments, the Minister will be prepared to accept that the seven-year licence should be included in the Bill. I suggest that we should work backwards when we come to the so-called independent valuation, because one cannot work out the capital value until the size of the licence fee is known, there is an agreement on the amount of money that will go into racing and it is acknowledged that, during the seven years, the entire operation will have to wash its face. One could keep arguing about the various costs that must be taken into account. 
 This is a golden opportunity for the Minister to take advantage of a compliant and supportive Committee, given all that we are trying to achieve. I hope that when he responds he will explain the basis on which the valuation will be calculated so that we can continue to work and move forward with confidence in him.

James Paice: I largely agree with every word that my hon. Friend and the hon. Member for Bath said. I am in a slightly difficult position, because I, too, considered tabling an amendment in similar vein but was dissuaded from doing so by the Tote itself, which felt that it might not be helpful to include such detail in the Bill. Nevertheless, as my hon. Friend said, this is an opportunity to explore the mechanism by which the Tote will be valued and, at least, to get a commitment from the Minister on 50 per cent. The hon. Member for Bath read out some of the Minister's winding-up speech on Second Reading. The Minister did not go quite as far as specifying 50 per cent. He talked about joint ownership and such things but did not make a commitment, although one could read one into his comments. He is smiling, which leads me to assume that I am right in saying that he fought shy of a final commitment, which I believe is necessary.

Don Foster: I apologise for interrupting the hon. Gentleman so early in his speech, but I ask him to reflect on what he just said. I do not know whether he would join me in not wanting the Minister to specify a figure of 50 per cent., other than to say that it was the maximum. Surely the Government would want to have negotiations on some of the issues raised by the hon. Gentleman. That is covered by my amendment.

James Paice: I fully recognise what the hon. Gentleman is saying. The right term is probably ''a maximum of 50 per cent.'' The figure that has been used throughout the debates during the past 18 months has been 50 per cent., although we have yet to put it into any context or add substance to it, whether it be a maximum of 50 per cent. or 50 per cent.
 My hon. Friend said that perhaps the taxpayer should pay the Tote. I believe that that was the way he put it. That might be stretching the point ever so slightly, but the important point is that the taxpayer has never put any money into the Tote itself or even stood by its borrowings. Therefore, there is an intellectual argument that the taxpayer has no right to benefit from the sale of the Tote, other than from the licence fee, which I will come to later, because the taxpayer has never had any financial responsibility for the Tote throughout its existence. Indeed, as I said on Second Reading, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) stated clearly in a written answer, when he was the Minister responsible for such matters, that the Tote's assets basically belong to the Tote board, and that the Tote board belongs to no one. That makes it clear that the taxpayer is not viewed as owning it. 
 In 1999. the British Horseracing Board obtained expert legal advice from Sydney Ketteridge and Margaret Gray, who argued that it was fallacious for the Government to have a share of the money for the Tote. They went on to say that 
''the monopoly was vested in a statutory Board in the public interest. The proper control of betting and racing was recognised as a benefit to the nation. The Tote itself derives no benefit from the monopoly rights and cannot sell these rights to a third party for commercial value.''
 It is doubtful whether the Government can support their claim to a share in the value of the Tote. 
 I am sufficiently realistic to understand that the Government will probably insist on a small pound of flesh for the Tote, but there is a strong intellectual argument that they should not receive any money other than the licence fee. What concerns me—this a point that I shall repeat on several occasions during our proceedings—is that none of us can foresee the future. The Minister and the Secretary of State have been completely open and genuine in their expressed intentions about the various aspects of the disposal of the Tote—I do not detract from them at all—and we all know that. Although it is commonplace in Committee to say that the Minister may not be around in few months and that we will have somebody else, that is a reality. We do not know what the future holds. 
 As I said on Second Reading, it is perfectly conceivable that the situation may have changed by the time the Bill has completed its passage, particularly if, in light of the Office of Fair Trading investigations, decisions are taken to delay some of the actions because the Bill is all-enabling. Therefore, there is an argument for saying that we need a commitment about the mechanism by which the Tote will be valued and a sale price agreed. Of course there are those, the bookmakers in particular, who contend that the value of the Tote is considerably in excess of the sums that have been talked about as a sale price—anything from £50 million to £150 million has been quoted.

Don Foster: More than that.

James Paice: As the hon. Gentleman says, the bookmakers are quoting figures of double that or more as their estimate of the value of the Tote. I am pleased that in his amendment the hon. Gentleman made it clear that the 50 per cent. figure would apply only if future operating profits were used to contribute to racing. One of my concerns in having that in the Bill was that a future Minister might decide to sell it to somebody else, such as an existing bookmaker, who would then get the 50 per cent. discount. The hon. Gentleman has covered that possibility and I am glad.
 I am sure that the Minister will tell us that the amendment is technically faulty. That is the usual response regardless of whether he wants to accept the overall point. The key point is that we need to know how the Minister intends to have the Tote valued, how he intends to deal with its liabilities—including the pension fund—and whether he accepts that the split between the two interest bodies that own the Tote, which he has already put into Hansard, should be 50:50 or some other balance. Those issues are important. 
 As the hon. Member for Bath has said, the more that the Tote is forced to borrow to pay for itself, the less it will be able to borrow to invest in its growth. As we shall discuss later, its growth during the period of the licence will be critical to its long-term future and 
 ability to deliver to racing a substantial income flow once the licence ceases to be exclusive—although we shall seek to prevent that—and there is competition in the pool betting industry, as the Government envisage. It is essential that by that stage the Tote has grown to such a size that it can resist not only that competition but can continue to deliver unto racing the sums of money that it is delivering now or indeed, we hope, considerably more. If it is to do that, it must have the resources to expand, and it will not have those resources if it has had to borrow to pay the Government. 
 I hope that the Minister can offer us considerable assurances on the points made by the hon. Member for Bath in his amendment.

Richard Caborn: As the hon. Member for Bath said, the Committee gives us a golden opportunity—a golden opportunity to step into reality. First, we have made it clear that we want to sell into a racing trust. Many hon. Members know that discussions have been taking place about getting a fair period of time in which the Tote can consolidate itself and go into the marketplace, and give the punter choice.
 Amendment No. 49 tries to evaluate the amount that the successor company will pay, but we should remember that the Government and the Tote say that they do not want that in the Bill. I gave clear assurances on Second Reading and I give them again: an independent valuation will be carried out. There will be, broadly, a 50:50 split of the asset between the taxpayer and the racing industry, because we believe that that is fair. 
 However, as long as an independent valuation can lead to agreement about the 50:50 split, other aspects must bear greater consideration, such as the length of time over which the payment is made. A series of commercial negotiations is necessary that can determine the survival and development of the Tote. It is far better to leave that to a commercial negotiation, as long as the Government have set out clear parameters, as I am doing now. 
 It would be naïve to believe that things are not already happening. A dialogue has been taking place for a considerable time between the Tote and the Treasury, so in the real world the Tote is in discussion with the Treasury, the body with which it will negotiate. We have given an absolute commitment that there will be an independent valuation. We have said that, broadly, it will be a 50:50 split, because we think that that is fair to the taxpayer and the punter. But many other aspects are probably more crucial to the Tote and to the way in which it can develop over the seven years—the length of payment, how the debt is raised, how it is paid back and over what period and whether it is back-loaded or front loaded. Many commercial considerations will be necessary. The more politicians keep out of those, the better; and the more they are kept out of the Bill, the better. Therefore, I hope that hon. Members will accept that, by resisting the amendment, we shall be doing the Tote and the Government a favour. 
 As I said on Second Reading, we must be mindful of the European Union's rules on state aid and understand the point that we have reached on competition. Indeed, we made a manifesto commitment to sell the Tote to a racing trust, and that is what we are doing. We believe that we are living up to our treaty obligations, while retaining the flexibility to get a fair deal for the Tote and put the proceeds into the racing industry. Therefore, I do not believe that the amendment should be included in the Bill, nor that it would be in the Government's best interests to include it.

Don Foster: First, I thank the Minister for putting clearly on the record again the Government's intention to sell to a racing trust and for stating again that a 50:50 split is broadly the right way forward because, as he has said many times, he believes that that is fair. I suspect that all members of the Committee are well aware of the discussions that have taken place and no doubt are taking place as we speak. I must say, as gently as I can, that seeking to persuade members of Opposition parties to support him and what he wishes to happen by telling us that we are doing the Government a favour will not endear him to many of us.

Richard Caborn: I have considered a number of Bills over my 20 years in Parliament, and this is the first time that I have been on a Committee in which the official Opposition and the spokesman for the Liberal Democrats have said that they fully agree with the principle of the Bill and want to ensure that it is enacted—probably in a slightly modified form. I thought that we were all of one purpose. In that sense, I was thinking about the ''we factor'': the fact that we all agree that we have to get the Bill through. It is a new experience.

Don Foster: If the Minister is so enjoying the togetherness, I look forward to receiving similar emoluments from him for our contribution to the debate so far. I am grateful to him for clearly making commitments. Again, I gently say to him that he suggested that the things that he has just referred to—a roughly 50:50 split, the probability of a racing trust being involved and so on—should not be included in the Bill because there are a number of other important matters. He rightly referred to them: the length of repayment will clearly be important and I mentioned state aid in my contribution. These things will important in respect of the Tote viability. However, I remind the Minister that these issues are not included in my amendment, which carefully covers only those aspects relating to the sale about which the Government have given clear commitments. The amendment deliberately avoids the important additional issues that the Minister has raised.

Richard Page: As someone who has put a Bill on privatisation through the House of Commons, I am fully aware of the worries in relation to the arguments about state aid. However, is it not rather peculiar for the Minister to worry about that aspect when the Government have given no money to the industry, and
will be receiving money out of it? I cannot see how any aspect of state aid should be applied in this instance.

Don Foster: The Minister may wish to intervene to comment on that. I suspect that he would say that some might consider a new body receiving assets potentially at half price and then going into a marketplace would be worth challenging in the European courts. I understand that the Government have already had preliminary discussions with the European Union, and were they to follow the route that they are clearly planning, but not prepared to include in the Bill, we would probably be all right. We might get clear confirmation from the Minister in the stand- part debate. Nevertheless, it appears that he is not yielding. There is not the likelihood of even a postcard to Mrs. Foster, and she will be bitterly disappointed by that. Certainly, many people in the racing industry will be disappointed that the Government are not willing to include in the Bill what they have said that they are clearly going to do.

Richard Caborn: I want to ensure that when the hon. Gentleman writes to Mrs. Foster she has all the facts in front of her. I stress the detail in which the racing trust and our financial adviser, PricewaterhouseCoopers, are doing the preparatory work. A methodology for valuing the business prior to the sale has been established, and broadly agreed with the racing trust adviser. The methodology of valuing the business has been broadly agreed, and therefore I think that we are moving in the right direction. That should assure Mrs. Foster that everyone would get a fair deal.

Don Foster: I suspect that if Mrs. Foster were to read the transcripts of the debate—it is extremely unlikely that she will: she has better things to do—that would come as no reassurance to her whatever. The Minister makes my point very effectively; he has dug himself into a hole. He has just told the Committee that we are well on the way to having agreement about moving to a racing trust that will be 50:50, but we appear to be in agreement about some of the other extremely complicated, important issues. We could put the whole lot into the Bill since we appear to be in such agreement.
 For some bizarre reason, which has not manifested itself in the Minister's contribution, the Government are not prepared to include those points in the Bill. I was going to say that I know when I am flogging a dead horse, but in the context of our deliberations I thought that that would be inappropriate. I know when I am trespassing on the Committee's valuable time and I know also when it is time to give up, so I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Richard Caborn: The clause gives power to the Secretary of State to abolish the Tote on a given date, which provides the flexibility required to ensure that the Tote is abolished only when everything is in place for a speedy transfer of its assets to the new owner. Consequently, this measure will be implemented as close as possible to that point of sale.

Don Foster: There are a couple of points I would like to raise with the Minister. He has said that debates are now ongoing, and he said a minute ago that discussions on the methodology were well advanced. I wonder whether the Minister would tell us the Government's view of the current pension fund deficit in relation to that evaluation. I know that it is subject to formal review, but I understand that there is a pension fund deficit of about £4 million. The question is whether that will be covered 100 per cent. by the Government, or will it be treated as a negative asset in the calculation? I would be grateful to hear what the Government's intentions are in that respect.

Richard Caborn: That will be part of the valuation, and whatever deficit exists should be covered in the negotiations on the price of the Tote.

Don Foster: No, the Minister is not answering the question. It will obviously be taken into account in the valuation—that is pretty obvious. My question was whether it will be subject to the 50:50 rule, or whatever the precise percentage will be. Do the Government believe that the new body responsible for the Tote should have 50 per cent. of responsibility for that debt, or, given that the debt has been accrued under a different form of ownership, should 100 per cent. be paid for by the Government?

Richard Caborn: If it is part of the evaluation, the answer would be yes, but in the real world it will form part of the negotiation. That is why it would be wrong to tie the matter down as tightly as the amendments specify. It is also why I hope that there can be an agreement on that issue, and others. That is part of the negotiations, and the discussions about the valuation of the Tote.
 Question put and agreed to. 
 Clause 1 ordered to stand part of the Bill.

Clause 2 - Successor company: transfer

Question proposed, That the clause stand part of the Bill.

Richard Caborn: The clause allows the transfer of the Tote property and liabilities to a company wholly owned by the Crown. The successor company will be formed and registered under the Companies Act 1985 as a company limited by shares. The transfer will take place on the day appointed by the Secretary of State, and I have already explained that it is intended that the Crown will own the company only for a short period prior to its sale. As I have said repeatedly, our intention is to sell the company to a racing trust.
 Question put and agreed to. 
 Clause 2 ordered to stand part of the Bill.

Clause 3 - Sections 1 and 2: supplemental

James Paice: I beg to move amendment No. 1, in
clause 3, page 2, line 39, at end insert— 
 '(6A) The Secretary of State shall ensure that the directors of the successor company following the vesting of the property, rights and 
liabilities of the Board on the appointed day are the same people as were members of the Board before the appointed day, save to the extent that any individual member has not given his consent to being appointed as a director of the successor company.'.
 This is a technical amendment, but it is important. The Tote proposed it, and it is about the status of its directors. As the Minister has confirmed, the Government intend to create a successor company and, in almost the same breath, to sell it to the racing trust. However, the legislative basis for a continuity of directors is missing. I am not suggesting that there is any malign intent on behalf of the Government suddenly to get rid of the existing directors and to appoint a new lot for the five minutes of the successor company under Government ownership. However, it is important to clarify that the existing directors should become directors of the successor company unless they individually choose not to be. 
 Once the Tote is sold to the racing trust, as we hope it will be, that trust should decide whether a change of directors is necessary. As with any company, the owners should decide who are the directors. I am simply trying to clarify the situation for the successor company that exists in the period between the current Tote and it becoming wholly owned by the racing trust. 
 The amendment is important for the purposes of continuity. We always have to consider the unlikely event, and on Second Reading in response to an intervention from the right hon. Member for Livingston (Mr. Cook), the Minister referred to the possibility that something could go wrong and that the sale to the racing trust might not happen. 
 We need a belt-and-braces approach. We all hope that there will be no problem, but it is conceivable that, having taken the Tote into state ownership, something may go wrong. In that event, the Government would be stuck with ownership for longer than is currently envisaged. I seek only to ensure that the current directors of the board remain until the Tote is taken over by the racing trust or whomever.

Richard Page: I wish to intervene only briefly. I support my hon. Friend's argument. I appreciate that it is a technicality and that it represents a belt-and-braces approach, but the Minister said that he hoped that there would be only a short period between Government ownership and the handover to a racing trust.
 I do not know what is a short period. For Stephen Hawking it is a few millennia; for the Government it could be three or four months. There could be a period of instability in which various moves are made and actions taken, and it is most important to the stability of, and confidence in, the measure that we ensure that the directors who know how to run the Tote operation are there to take over when the time comes. 
 We are being super-cautious, but I hope that the Minister appreciates the fact that the amendment has been tabled with the best of intentions for all concerned.

Adrian Sanders: I am not convinced by the amendment. It would bind the
 Secretary of State to ensure that the directors of the successor company are the same people as were members of the board before the appointed day when the successor company assumes control. The freedom of the shadow racing trust—the successor body—to determine whom its directors were, or how it would carry out its management, would be removed.
 My hon. Friend the Member for Bath said on Second Reading that he did not want the Secretary of State to be forced into selling the Tote to one particular buyer regardless of its offer. Perhaps I have misinterpreted the amendment.

Richard Caborn: I thank the hon. Member for South-East Cambridgeshire for tabling this probing amendment, and I think that the hon. Member for Torbay (Mr. Sanders) has misinterpreted it.
 Amendment No. 1 would ensure that after dissolution the Tote board members would continue to be board members of the successor company. That would be the case. I want to put it on record that the Tote board does an excellent job and will, no doubt, continue to do so until the point of sale. When the successor company has been sold to a new owner—this is where there is a difference of opinion—the new owner will appoint the board. We do not want to tie the hands of the new owner in this matter. That will not affect anyone's rights under employment law and the executive directors, like other employees, will be protected under clause 3(6). I ask the hon. Member for South-East Cambridgeshire to withdraw his amendment.

James Paice: I am grateful for the Minister's response. Before perhaps complying with his request, I want to press him a little further. We agree that when the successor company has been sold to the shadow racing trust, none of us wants to tie the trust's hands and it must appoint its own directors as appropriate. However, there will be a period between the Tote ceasing to have its current status, when the successor company takes over its assets and so on, and that successor company being sold on. It might be five minutes, or the time it takes to sign the documents, but it might be considerably longer if matters go adrift.
 All I am seeking from the Minister is an assurance that the directors of the successor company, which will, by its nature, be a different company—that is what the clause is all about and the Government are appointing the successor company—will be the same as the existing directors of the Tote until the point of sale to the racing trust.

Richard Caborn: I repeat what I said: the Tote board members on the appointed day of dissolution will continue to be board members of the successor company. It is our intention to sell it, as quickly as possible, to a racing trust. Beyond that, we must obviously retain some flexibility. We expect the board members to be on the board of the successor company. I am trying to provide the reassurance that the hon. Gentleman asked for. I believe that I have done so and that we are giving the racing trust the flexibility to reflect on the membership of that board. That is the
 best way forward in the circumstances, and I hope the amendment will be withdrawn.

James Paice: As I suspect we shall find with a number of amendments and in view of the Minister's response, what is wrong with putting the amendment in the Bill? I am trying to achieve what the Minister intends, and I do not see a problem with putting that in the Bill. When the successor company is owned by a racing trust or someone else, who the directors are will be entirely a matter for the new owners. No one is talking about fettering them.
 There are perhaps more important issues that should be in the Bill, whatever the Minister says, so I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Richard Caborn: The clause explains in more detail how the measures in clauses 1 and 2, which cover dissolution of the Tote and its transfer to a company that is wholly owned by the Crown, will take effect. The detailed effect is set out in the 10 subsections to clause 3. Subsections (1) and (2) ensure that anything done or in the process of being done in relation to the Tote is regarded as having been done or continued by the successor company. Subsection (3) provides that, at the appointed day, any reference to the Tote or members or officers of its board in a document or agreement is to be treated as a reference to the successor company and its members or officers.
 Subsection (5) provides that any property, rights and liabilities of the Tote are vested in the successor company without the need for any further legal formality. Subsection (6) safeguards the rights of the Tote's employees, including the right to be consulted. It ensures that the Transfer of Undertakings (Protection of Employment) Regulations 1981 apply to the transfer of the Tote to the successor company. This is an important legal protection for the staff, regardless of whom the Tote is sold to. 
 Subsections (8) and (9) provide that the Secretary of State shall consult the Tote before nominating the successor company. Furthermore, he will consult the Tote and the successor company before deciding on the appointed day for its dissolution and transfer. Subsection (10) allows the Secretary of State to revoke and replace the previously nominated successor company, as outlined in clause 2(2)(a), before the appointed day and provides for an alternative successor company to be identified, should that be necessary for any reason. 
 The provisions should provide continuity to ensure a smooth transfer for the Tote from the public to the private sector. They are the nuts and bolts that will enable us to fulfil our manifesto commitment to sell the Tote.

James Paice: I do not wish to trespass on your prerogative, Mr. Sayeed, but the Committee will have noted that in your wisdom you decided not to select some amendments that I had tabled to the clause. I do not question that, but they were amendments suggested by lawyers acting for the Tote, who
 perceived a shortcoming in the drafting of the Bill. Although small, the proposals were intended to amend the beginning of the Bill. I shall not read them out in a manner that might suggest that I have moved them, but, as we learnt only yesterday afternoon that the amendments had not been selected, I am sure that, long before then, the Minister had been advised how to respond to them. They question whether these words form a sufficiently comprehensive statement:
''Anything done by or in relation to the Horserace Totalisator Board''.
 If the Minister was advised how to respond to those amendments, I would be grateful if he gave us the benefit of that advice.

Nick Hawkins: I want to speak briefly, because when I looked at what my hon. Friend the Member for South-East Cambridgeshire had drafted before the amendments were tabled in our names, it seemed to me, with my background as a corporate lawyer, that the wording the lawyers had advised the Tote to propose was an improvement on the Bill. Therefore, like my hon. Friend, I would be grateful if the Minister explained why his advisers are so certain that the wording in the Bill is an improvement.

Richard Caborn: The answer is that they believe that what they have drafted is an improvement. For the record, we will not necessarily appoint the Tote board as first directors of the successor company. I may have misread my notes, so I want to correct that for the record.

James Paice: On a point of order, Mr. Sayeed. I am grateful to the Minister for reading that out, but it negates the whole of the previous debate—it is a completely different response from the one that the Minister gave when replying. The response of Conservative Members to such a remark would have been totally different.

Nick Hawkins: Further to that point of order, Mr. Sayeed. I do not know whether it is within the jurisdiction of a member of the Chairmen's Panel such as you to declare a previous debate null and void, but as my hon. Friend the Member for South-East Cambridgeshire withdrew the amendment, which we would otherwise have pressed, only on the basis of ministerial assurances, and the Minister got up a few seconds later and completely contradicted those assurances, can you as Chairman reopen the debate on the previous amendment? Clearly, the amendment was withdrawn on a wholly false and erroneous basis.

Jonathan Sayeed: I thank the hon. Gentleman for his advice, but I cannot go backwards on a Bill, nor am I responsible for the Minister's words or the actions of the Opposition.

Richard Caborn: To be clear, it would be useful to put on the record what I said, and the intention behind it. I said that amendment No. 1 seeks to ensure that Tote board members, on the appointed day, will continue to be board members of the successor company. The Tote has done an excellent job and will no doubt continue to do so until the point of sale. Once the successor
 company has been sold to the new owner, it will be for it to appoint the board. We do not want to tie hands, and they will be the new owners. I clearly expressed my intention and said that we expect the directors to continue. However, whether we would have to appoint new directors depends on the length of time before the sale. We intend to have the current directors of the company in the new company until the point of sale. If the time involved lengthens, which I hope it will not, there may be a point at which new directors have to be appointed to the board.
 To reassure the Committee, we are trying to make the transfer, which involves selling into the public sector, and then out of the public sector and into a racing trust, as quick and smooth as possible. Therefore, the directors who are on the Tote at the moment will be on the board of the successor company. If the time involved is long, there will have to be reappointments to the board. The Government would have the right to do that, but I hope that the period involved will mean that that does not happen and that we will move smoothly into the sale to the trust.

James Paice: Further to that point of order, Mr. Sayeed, the Minister has clarified, and slightly reined back from, the comments that caused the expostulation from Conservative Members. I will try to get this right. As I understand it, he is saying that we have a set of directors of the Tote. On the appointed day, the Government will set up a successor company—Tote 1, we will call it. The same directors will be directors of Tote 1. If Tote 1 is not sold on pretty quickly to the racing trust, it may be necessary at some stage in the future to re-engage the normal appointments and reappointments process that we know that the Tote board goes through.
 If that is what the Minister is saying, that is fine. My concern is that, the moment after vesting power in that new company, the directors of Tote 1 might not be the same directors. If the new company is sold to the racing trust pretty quickly—within hours or days of setting it up—as we all hope and expect it will be, the same directors will be directors not only of the Tote but of Tote 1 until the moment that the successor company is sold. We all agree that once it is sold to the racing trust or anybody else, it is that body's job to decide who its directors should be. I am concerned to ensure that, as long as there is not a long extension of time, the same directors remain in place until that point.

Jonathan Sayeed: Before the Minister responds, let me make it clear that this is an extension of the debate on clause 3 stand part, as opposed to a series of points of order.

Richard Caborn: I reassure the Committee that we intend to take the Tote members, put them on to the new board, and, we hope, sell quickly into a racing trust. If the time involved is extended, for whatever reason, there may need to be further reappointments of directors at some stage.

James Paice: If the time involved is extended, for whatever reason, there may need to be further reappointments of directors at some stage. I do not
 think that the Minister ever got round to replying to my introduction on stand part. I raised the issue of the amendments that had not been selected. In particular, I asked the Minister for his response to the suggested drafting and the claim that the words ''Anything done by'' in line 5 on page 2 were insufficiently comprehensive and should be replaced by:
''Any agreement made, transaction effected or other thing done by''.

Jonathan Sayeed: Order. As the amendments were not selected it is not necessary for the Minister to answer those points.

James Paice: I am sure that it is not necessary for the Minister to do so, but he is a generous-spirited man and I hope that in the spirit of generosity he will still give me the benefit of his advice.

Richard Caborn: The suggestion is that the phrase
''Anything done by or in relation to''
 the Tote does not cover everything it needs to. We are firmly of the opinion that the current drafting is sufficient. We fail to see what can be done to the Tote that is not also, by definition, being done ''in relation to'' it. I must be careful because I do not want to discuss amendments that were not selected. I hope that the assurance that I have given to the hon. Gentleman is sufficient. 
 Question put and agreed to. 
 Clause 3 ordered to stand part of the Bill.

Clause 4 - Tax

James Paice: I beg to move amendment No. 30, in
clause 4, page 3, line 4, after second 'tax', insert 
 ', stamp duty land tax'.

Jonathan Sayeed: With this it will be convenient to discuss the following:
 Amendment No. 31, in 
clause 4, page 3, line 12, after 'enactment', insert 'or regulation'.
 Government amendment No. 42. 
 Amendment No. 32, in 
clause 4, page 3, line 12, after 'duty', insert 
 'and Stamp Duty Land Tax'.

James Paice: I must confess that I am not in the habit of writing to my wife very often, or even to other parties, but if I were to follow the example of the hon. Member for Bath and do so, I have a small degree of optimism that I might be able to on this group of amendments, not least because the Government have tabled an amendment, which simply serves to point out an omission that I made in not covering all the avenues. The amendments are simple. The clause, which relates to the tax impact of the sale and transfer of the Tote, should include reference to the new stamp duty land tax. The approach underlying the clause and the Bill is intended to ensure that the conversion of the existing board into a plc has no tax consequences. We have a new tax—believe it or not—from this Chancellor: stamp duty land tax, which came into
 effect on 1 December 2003. That was probably after this Bill had gone to the printers, and therefore it is not included, but it clearly needs to be if we are to retain the planned neutral impact of the Bill. I understand that the Inland Revenue has acknowledged the need for the clause to be amended. Our proposals are simply intended to correct the omission, and I look forward to the Minister's acceptance.

Richard Caborn: The aim of clause 4 is to preserve the tax neutrality of the transfer, which is what the hon. Gentleman was getting at. Amendments Nos. 30 and 32 insert express references to stamp duty land tax. The Government accept that stamp duty land tax needs to be mentioned, but it is sufficient for that to be in subsection (2). Therefore, I commend amendment No. 42 to the Committee and ask the hon. Gentleman to seek to withdraw his amendment.
 Amendment No. 31 ensures that the transfer to the successor company will not give rise to a liability under an enactment or regulation about stamp duty. The word ''enactment'' is capable of covering secondary legislation, and we do not believe that an arbitrary distinction could be drawn between tax liabilities in primary legislation and those in regulations. For that reason, I hope that the hon. Gentleman will not press the amendment.

James Paice: I should be interested if the Minister could explain why he believes that it can all be covered under subsection (2), as in most clauses the opening lines are important. Clause 4 says that
''for the purposes of any enactment about income tax, corporation tax or capital gains tax—
(a) the successor company and the Horserace Totalisator Board shall be treated as the same person''. 
The Minister appears to be saying that it is not necessary to put stamp duty land tax into that statement, but it can go in, as he proposes, in line 12, at the end of the clause. I do not know why that is, as all the other taxes are covered in the opening line of the clause. I should be grateful for an explanation.

Richard Caborn: The explanation that I have is that subsection (2) deals with stamp duty and stamp duty land tax. Subsection (1) is about the rest.

James Paice: I shall not argue the point, as I suspect that the Minister and I would quickly strip open Revenue legislation, but I am grateful to him for his response. If the Government's view is that his amendment will suffice to ensure the neutrality of the taxation regime, which we both seek to achieve, I should be prepared to support it. It probably goes down as worth half a postcard. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Amendment made: No. 42, in 
clause 4, page 3, line 12, after duty, insert 
 'or stamp duty land tax'.—[Mr. Caborn.]
 Question proposed, That the clause, as amended, stand part of the Bill.

Richard Caborn: The clause deals with two sets of taxation. Subsection (1) provides that for all income tax, corporation tax and capital gains tax purposes the
 successor company is to be treated as if it had always been the Tote, and the transfer will not have any tax consequences. I think that that answers the hon. Gentleman's question. Subsection (2) ensures that liability to stamp duty or stamp duty land tax does not arise on the vesting of the Tote's property in the successor company, or on certain preliminary transactions. Together, the measures will provide tax neutrality for the sale of the Tote.
 Question put and agreed to. 
 Clause 4, as amended, ordered to stand part of the Bill

Clause 5 - Pre-sale issue of shares, &c. to government Mr. Paice: I beg to move amendment No. 2, in

clause 5, page 3, line 19, at end insert— 
 '(1A) No request in respect of a person specified under subsection (1)(b) shall be made for the issue of securities to anyone unless the Secretary of State is satisfied that the person nominated will ensure that any dividend from those securities is utilised by the company in the interests of horseracing.'.

Jonathan Sayeed: With this it will be convenient to discuss amendment No. 3, in
clause 5, page 3, line 19, at end insert— 
 '(1A) No nomination under subsection (1)(b) shall be made of any person other than one who receives the securities on behalf of a Trust Fund whose purposes are in the interests of horseracing.'.

James Paice: As you will probably have realised, Mr. Sayeed, this is one of the most important groups of amendments that we have tabled to part 1, because it would ensure that the future ownership of the Tote was in the best interests of racing. The amendments do not go so far as specifically to require the Tote to be sold to the racing trust or the shadow trust, as currently exists, not because we do not want it to be, but because we have taken at face value the Minister's comments on Second Reading that the new owners must be able to deal with any eventualities that may arise. I am sure that in principle the Minister will be sympathetic to what we seek to achieve. Indeed, from his remarks on Second Reading, I know that he is.
 As I said on Second Reading, the Tote is widely seen by the whole racing industry as part of racing. Even the punters view it as such. They go to the race track, where they see its familiar livery. They know it is there and they expect it to be there. I believe that the vast majority of punters, as well as everybody else involved with racing, believe and expect that the profits, dividends—we can call them what we like—should go back into racing. Any idea that the Tote would be sold to some person or organisation that would not plough the proceeds back into racing would be met with absolute horror and objection right across the world of racing. 
 Amendments Nos. 2 and 3 are not necessarily complementary. They are alternative ways of trying to get into the Bill some mechanism to ensure that the objective that I have just described is met. Amendment No. 2 states that 
''unless the Secretary of State is satisfied that the person nominated will ensure that any dividend from those securities is utilised by the company in the interests of horseracing'',
 he would not be able to sell the shares to a new owner. Amendment No. 3 refers to 
''any person other than one who receives the securities on behalf of a Trust Fund whose purposes are in the interests of horseracing.''
 The amendments provide different ways of addressing the situation. 
 The Tote is of immense value to the racing industry in cash terms as well as the emotional terms that I have just described. The latest half-year interim report shows profits of £9.2 million and in the past year it has put £10.7 million into racing, excluding the levy of more than £14 million. That is a considerable cash input to the racing industry, and it is fair to say that racing would be in desperate straits without it. 
 We should be encouraged by the fact that the racing industry is perhaps stronger than ever. In 2003, there were more fixtures, more people attending racing and higher average attendances than ever before. The industry is in a growth phase, but it needs resources ploughed back from the Tote and, as we shall discuss later, from the levy board or its successor systems. That money must go into racing. 
 The Government have expressed on numerous occasions, and the Minister has already repeated in Committee, a desire to transfer the Tote to a racing trust. I shall not bore the Committee by reading out the raft of ministerial statements reinforcing that; we all understand that it is the case. Following the Government's original announcement that they planned to sell to racing, the shadow racing trust was set up to negotiate with the Government. Bearing in mind who might look in on these proceedings, I hope that it is not negotiating at this very time, because such negotiations would be taking place without the chairman, which might be inconvenient. 
 As we have heard, the trust continues to negotiate with the Government, and rightly so. In November 2002, Lord Lipsey stood down from the Tote board to become chairman of the shadow racing trust. Everything that has happened points to selling to the racing trust. I strongly welcome that, as do my hon. Friends and the racing industry. We understand that the board basis of the trust means that it will have cross-industry representation. It will have an independent chairman and representatives from the British Horseracing Board, which is the industry committee, the Jockey Club, the Racecourse Association, the Racehorse Owners Association, Tote staff and, of course, from punters. A cross-section of the racing industry was involved, and there may well be others represented on the board. 
 The Tote is part of racing and must remain so. I know that that is known and accepted by the Government, and I am just repeating what is widely understood, but I am concerned that there is nothing in the Bill to turn that into reality. I do not doubt in any way what the Minister has stated in his objectives, or what has been said by the Secretary of State or by the previous Home Secretary, the right hon. Member for Blackburn (Mr. Straw). I am always concerned, 
 however, that there is many a slip twixt cup and lip, as the old saying has it. Things could go adrift. 
 Negotiations with the racing trust may break down or, as the hon. Member for Bath suggested, there may be some reason why a negotiation with another body might be necessary. I am trying to ensure that the Bill says that those negotiations should take place only with a body that has racing at its heart, which would ensure that that flow of money comes back into racing. I do not mind whether amendment No. 2 or amendment No. 3 is accepted, or whether the Minister tables a similar amendment that serves the same purpose. 
 Without trespassing on your generosity, Mr. Sayeed, it is interesting to note that in the next part of the Bill that deals with the levy, the Government have clearly stated that the assets and property of the levy can be used only in the interests of horse racing. I will not read the relevant passage out, but they have included that although they have not put it in the part of the Bill relating to the sale of the Tote. That is a grave omission, and I do not understand it. 
 I can understand the Minister not wanting his hands to be tied by legislation to sell the Tote to the shadow racing trust, but I do not understand why it is not possible to put constraints in the Bill concerning to whom it should be sold to ensure that it is kept within racing and that the benefits, proceeds, profits and dividends are ploughed back into racing, as we all expect. That is the objective of the amendments. I suspect that the spirit of the amendments will be greeted with support in the Committee and throughout the racing industry, and I hope that the Minister will respond in a way that demonstrates that he understands what we are trying to achieve. We want to ensure, as the Government are doing in part 2, that the proceeds of the action we are taking—the nationalisation and subsequent privatisation of the Tote—remains in the best interests of racing. That is what I am trying to achieve.

Jonathan Sayeed: I call the current Mr. Foster.

Don Foster: I am grateful to the current Chair of our proceedings, although I note with interest that you will not be our Chairman at all times, Mr. Sayeed. Some changes are pre-ordained; others perhaps are not. I say to you in your temporary post as our Chair that I have much sympathy with the remarks of the hon. Member for South-East Cambridgeshire. You are obviously studying our proceedings with great interest and you will have noted the first amendment we discussed—No. 49, which I tabled—although I withdrew it for reasons that I gave at the time. That amendment referred to the need for the new body to provide that
''all future operating profits are used to contribute to racing.''
 That is a similar intention to that of the hon. Gentleman's amendments. 
 In this Committee, we have had some difficulty with the approach adopted by the Government in relation to several issues. During our debate on Second Reading, a number of colleagues and I referred to the various gaps in the Bill. At the same time, we said 
 that we did not for a minute dispute the Government's very clear intentions. In response to one issue raised during that debate, the Minister said: 
''What I am saying today at the Dispatch Box is, according to the conventions of the House, a clear statement of the Government's intentions. That is why I do not believe that the provision needs to be included on the face of the Bill.''—[Official Report, 8 January 2004; Vol. 416, c. 444.]
 In other words, the Minister referred quite rightly to the convention whereby the Government make clear their intention from the Dispatch Box or in Committee, and therefore argue that it is not necessary to include it in the Bill. Taken to its logical extent, that could mean that very little needs to be in the Bill provided that the Minister declares something to be the clear intention of the Government. 
 The hon. Member for South-East Cambridgeshire rightly points out that those items that the Government have chosen to include and those that they have chosen not to include form a slightly odd collection. The Bill contains a great deal of detail about how taxation will be dealt with for the new body, but the Minister could have told us in Committee what the Government intend. 
 However, some more crucial issues, such as whether the Tote will go to the racing trust, which we will debate later, and whether things will be done 50:50 are not in the Bill. Here we have an issue that is at the heart of why we are doing what we are doing—ensuring that whatever happens to the Tote is in the interests of racing—but it has not been included in the Bill. The first parts of the legislation are all about that important issue, whereby the sale of the Tote is designed for the benefit of racing, yet it does not appear. 
 I am not suggesting that the most appropriate way to resolve the problem is to adopt the words used by the hon. Member for South-East Cambridgeshire, but at least those words are a vehicle for that. We must hear something more substantial from the Minister in his rejection of the hon. Gentleman's proposals than merely that they do not need to be in the Bill because the Government intend to do those things anyway. He must explain why less important matters are included when that central issue is not.

Richard Page: The Minister will recall that on Second Reading several hon. Members made the point about the importance of racing. I am not going to gallop over the ground covered by my hon. Friend the Member for South-East Cambridgeshire.

Don Foster: Rein him in.

Richard Page: Yes, rein me in.
 There are times when we forget that racing is not only a great sport, but a very important industry. My hon. Friend the Member for South-East Cambridgeshire made some points about its importance, and we know that about 100,000 people depend on the industry for their employment. If we get the funding wrong, we put them at risk. When one considers the pecking order of responsibility of enterprises, one finds racing in the top 10. We have to treat it with a great deal of care and consideration. 
 The funding of racing is based on a number of streams, which are not guaranteed. I am thinking particularly of the current media rights. We all remember what happened to football when its TV and media funding streams collapsed. We already have intimations that the attheraces funding for racecourses could be under consideration. That is a very good deal, but there is talk of it being at risk. No one has mentioned it so far, but the industry also has to deal with the delicate administrations of the Office of Fair Trading, and we have no idea what effect that will have on funding streams. 
 The Tote is a rock in the middle of such uncertainty. It supports and sponsors individual races and, as my hon. Friend the Member for South-East Cambridgeshire said, it contributes to the levy. I have already mentioned the £100 million that it has given to racing, and where would racing be without that substantial sum? There is a real worry that the Tote might not become a racing trust. 
 I know that we are back to where we have been on the whole Bill—this matter is a case of, ''Trust me, I'm a politician.'' However, we want to see something a little firmer in the Bill to give the racing industry confidence. I hope that the Minister will consider my hon. Friend's amendments, so that, even if they are not technically correct, in some shape or form they can be used by the Government to give that reassurance.

Richard Caborn: The transfer of the board and the assets is a simple transfer of assets. In the sale of the Tote, we are dealing with the sale of a company to a new owner. They are different, as I am sure the hon. Gentleman will acknowledge.
 Amendments Nos. 2 and 3 would ensure that the Secretary of State could not sell the Tote to anyone other than a racing trust or a similar body. Therefore, as the Minister, I cannot accept them, because that would tie the Government's hands. 
 As the Secretary of State and I have said on behalf of the Government on a number of occasions, we want to sell the Tote to a racing trust, but as I made clear on Second Reading, the Government have kept the other sale options open. We believe that that is right. We do not specify in the Bill the details of the purchaser, or the type of purchaser, because, if we did, in some unforeseen circumstances we would have to come back to the House of Commons for permission to sell the Tote in a different way. No one can give us a complete guarantee that racing will be in a position to buy it. There could be all sorts of reasons why not, none of which may be financial. In view of the assurances that we have given about an independent valuation, about what is already happening between the shadow trust and the Treasury and about the discussions that are taking place, it would be intolerable if the purchaser—a racing trust or similar body—were to restrict the Government's flexibility in the negotiations. The Government would then have Hobson's choice, because they would be limited by the amendments. 
 A more important point relates to the industry. As the hon. Member for Bath said, it is not just a sport; it is an industry, and many livelihoods depend on it. 
 Indeed, we have seen what has happened in recent months and years with the OFT and the like. I hope that the industry can come together in a racing trust and show unity of purpose on behalf of the sport and the industry, so that we can sell with confidence to a trust. That is our intention, but, as a Government, it would be irresponsible to tie ourselves down to the wording of the amendment in the Bill, because we would not be acting in the best interests of taxpayers and the country. 
 For those reasons I reject the amendments. As I said, we are not talking necessarily about financial issues, but about the possible inability of the sport and the industry to come together to develop a unity of purpose to create a trust. We need to be assured that we can put that trust into their hands.

Don Foster: I have said to the Minister on a number of occasions that I understand the importance of the Government's hands not being tied in the negotiations. Will he tell the Committee whether he believes that there are any circumstances in which the Government would be prepared to sanction a sale of the Tote to a body that does not intend to put the entirety of the profits received from the Tote into racing? If that is the case, would it not be in the best interests of racing simply to keep the status quo?

Richard Caborn: To a hypothetical question, I give a hypothetical answer. The answer is yes, we would sell into something. If we cannot sell into a racing trust, and the House of Commons has said that it wants to sell the Tote, we will be in some difficulties. We would have a piece of legislation instructing us to sell the Tote, and we would therefore have to consider options. That is not our intention.
 I want to make it clear that we are not prepared to have the hands of Government and our negotiators tied, as they would be in the situation that would arise if we accepted the amendments. We intend to sell to a racing trust, but we are not prepared to put our negotiators into a position where there could be a false price or a false situation.

Don Foster: We are suddenly and rather surprisingly on difficult ground. The Minister says that there is clear agreement in the House of Commons that the Government should sell the Tote. That is simply not the case. There is clear agreement in the House that the Tote should be sold—on the assurance that the money raised in future by the Tote, or the profits on the money raised, will be used to benefit racing. That is the clear understanding that all Members of the House had when we gave the Bill a Second Reading.
 If the Minister is not prepared to say that he will ensure that, whomsoever the Tote might be sold to, whether it is a racing trust or any other body, the profits from that new body will go to racing, we are into a completely different ball game. Surely everything that the Minister has said so far has led us to believe that the Government want to see both the taxpayer and racing do well out of the proposal. However, if he is not prepared to acknowledge that in some circumstances racing could lose out, and that in those circumstances the status quo would be better than selling, I am extremely concerned, and either I 
 have misunderstood the Government's intention, or it has been misrepresented.

Richard Caborn: The hon. Gentleman has not misunderstood the Government's intention. We intend to sell into a racing trust. I have said clearly what we have laid out in terms of the shadow trust. We have not gone into setting up a shadow trust or argued forcefully for a seven-year extension so that we can eventually see the Tote going into the racing industry in a robust way only to withdraw and say that we will not sell into a racing trust. However, it would be wrong to tie the hands of the Government and our negotiators and to say that that is the absolute. If that were done, the negotiators would face Hobson's choice.
 There is every intention to sell into a racing trust. We said that in our manifesto commitment, but I cannot say that the sport and the industry will develop a trust. That is not in my power, or the Government's power. I would expect the responsibility of the sport and the industry to be such that they would come together to create a trust that the Government could sell the Tote into. I believe that the framework that is being operated to get the price is transparent and fair to the trust and the racing industry. If people want to debate the matter in the Oxford debating society, that is fine, but this is not the Oxford debating society; it is the real world. I am not prepared to tie the hands of our negotiators so that they are limited in their negotiations. 
 The Government want to sell into a trust. We believe that the sport and the industry should come together to create a trust. We have already indicated our good intentions by supporting the shadow trust, and being part of setting that up. The structure of the Bill reflects those intentions, but I am not prepared to tie the hands of our negotiators so that whoever is negotiating for the trust gets an unfair advantage over them. That is what the wording of the amendments would mean.

John Grogan: I accept the Minister's good intentions and the thrust of his argument. However, he mentions the manifesto. Manifesto commitments are being carefully examined in a variety of contexts at the moment. He also mentioned that the Government would have to come back to Parliament if they decided to sell to anyone other than the racing trust. Will he put on the record how that would be done? Would the matter be debated on the Floor of the House? There would be those of us who would be very worried about how selling to a bookmaker, for example, would be in line with our manifesto commitment. I would be grateful for details of exactly how Parliament would consider such a situation.

Richard Caborn: I go back to the point that the intention, as set out in the Bill, is to sell the Tote to a racing trust. We are now debating the position if the racing trust falls apart—the nuclear option. I hope that that will not happen and there is nothing to suggest that that would happen, but if it did happen, we would have given a commitment to sell the Tote
 and we would have to consider how the sale was made and how we could bring the receipts of that sale back into racing. The Government would have to consider that, and we would take those responsibilities seriously and honour our commitments. How that would be done would be open to negotiation, but we have not come across that scenario because our intention is to sell into a racing trust. We would have to consider the matter if we were unable to sell into a racing trust. I cannot make the position much clearer.
 I am not prepared to accept the amendments and to tie the hands of the negotiators to the degree specified in the amendments and, therefore, to put them at a disadvantage in the negotiation of both the price and the development of the Tote into the racing trust.

Nick Hawkins: I am listening carefully to what the Minister is saying and I recognise that he has done his level best to act with the best interests of racing at heart, but I worry that he is being boxed in by the Treasury mandarins when he says so many times that he cannot allow the negotiators' hands to be tied. People like me who support racing are worried that we will end up with people in the Treasury who have no interest in racing trying to set too high a price, and that is when the nuclear option becomes much more worrying for racing. Is that not the difficulty? I recognise the Minister's good intentions, but to what extent is he being told to say what he says by the Treasury?

Richard Caborn: Not at all. I have indicated that the Treasury and the shadow racing trust are already in negotiation. I have indicated that the form used by the racing trust is the form used by the Treasury. There is a coming together of minds on that and we must get the Bill through so that we can get down to the serious negotiations on the actual price, but a tremendous amount of groundwork has been done. I believe that the way in which the shadow racing trust and the Treasury are approaching the matter will enable them to agree a price, which will be transparent, as will the independent advisers. I believe that if the industry gets its act together it can create a trust that will be robust enough to sell the Tote into. I see nothing that will detract from that.
 If the trust implodes, however, the matter would have to return to the House of Commons for a new Bill to sell the trust. Fine. That may be the Opposition's intention, but I make it perfectly clear that that is not the Government's intention. We would have cognisance of whom we were selling it to, and we would ensure that it was sold to the benefit of racing wherever possible. 
 I give that assurance, but I am not prepared to accept the amendments and to tie the hands of the negotiators when they are negotiating with the shadow board and moving it into the trust.

James Paice: I am very disappointed with the Minister's reply, not because he has rejected the amendments for not being technically perfect, but because of his other reasons for doing so. We are rapidly moving into a different ball game, and it worries me. The Minister is now saying that the Government will sell the Tote come what may. I accept
 his personal intention to sell it to the racing trust if possible, but he talks about that in the future in terms of whether the racing industry can sort itself out and create a trust that he can sell it to. The trust has existed for 18 months.

Richard Caborn: Exactly.

James Paice: The Minister said ''If it can'', as if it were still to do so. I believe it is there: it is ready and waiting. The negotiation over price is still to be achieved, but the trust is there. The Minister must know whether he is happy with that structure, with only the price mechanism to resolve. However, by resisting the amendments, and indeed the spirit of them, which is much more worrying, he is making it clear that if the sale falls through, he does not want to have to come back to the House of Commons to get permission to sell the Tote to somebody else—one of the existing bookmakers, a new venture capital company or anybody. He is determined to sell the Tote, on the slight chance that the sale to the racing trust goes through.
 My aim in tabling the amendments is not to ensure that the Tote is sold to the racing trust or the shadow racing trust.

Richard Caborn: That is what it says.

James Paice: No, that is not what it says. I am sorry, Mr. Sayeed. The Minister says ''That is what it says''. He has not read the amendment. It refers to ''a trust''. The other amendment does not even use the word ''trust''; it simply refers to ploughing any dividend back into racing. I have purposely not tabled an amendment requiring the Minister to sell it to ''the'' racing trust for the very reasons that he rightly described: he should not have his hands tied by the Bill and be forced to sell to a specific organisation. The fact that the Minister intervened from a sedentary position showed that he had not even read the amendments, which makes it even more worrying. He is rejecting amendments that he has not read and fully understood.
 I am now extremely concerned that in a year's time we may wish to God that we had not voted for the Bill, as I and my hon. Friends did, because the Government might have gone against the spirit of that support, which was for the Tote to be taken into public ownership and then passed on into the ownership of a shadow racing trust, or at least of an organisation whose sole intent was the benefit of horseracing. 
 I shall not pursue the amendment to a vote, as that would be pointless, not least because I shall almost certainly want to return to the issue on another occasion. I phrased what I said just now carefully, so that hon. Members could intervene, if they wished, before I completed the necessary formalities.

Don Foster: Could the hon. Gentleman share with me his understanding of the situation? I accept, incidentally, the sensible approach of withdrawing the amendment now so that he can discuss it later. What is his understanding of the Government's intention? In the unfortunate event that the Government cannot come to a satisfactory
 conclusion in negotiations with a body that is prepared to put the profits that it makes from the Tote into racing, the Minister has said that they would have to come back to the House of Commons. At one point he said that they would come back to develop a new Bill, which might have been a slip of the tongue. Does the hon. Gentleman believe that the Government intend to go ahead and sell, even though it is not in the interests of racing, or does he still accept, as the Minister would perhaps like us to believe, that they will definitely sell in the interests of racing? I, for one, am confused.

James Paice: My interpretation is that the Minister personally is determined to sell the Tote to the racing trust, but—my hon. Friend the Member for Surrey Heath (Mr. Hawkins) is probably right—the forces of the Treasury and others in the Government will not let him accept the amendments, or even the spirit of them, because the Government intend to sell the Tote, come what may. The Minister is resisting the amendments because they might fetter those to whom the Tote is sold. That is precisely why I have tried to include them in the Bill—so that there is some fettering of those to whom it is sold, to ensure that they act in the best interests of racing. That was my sole intention. It was specifically not to narrow the sale down to the present shadow racing trust.
 If the Government resist the amendments, as they are doing, and the Bill remains unamended in this regard, on the slight chance that the negotiations break down, the Government will sell, come what may. I said in my concluding remarks on Second Reading that the Bill allows the Secretary of State to sell the Tote to whomever she wants for however much money she wants. I am concerned that, after less than two hours' discussion, those slightly emotive words seem to be gaining more substance, because the Government are resisting our amendments that are intended to prevent that happening. 
 I am disappointed in the Minister's response and his attitude. I had hoped that he would be far more generous, though not necessarily by accepting the words of the amendments, as I accept that I do not have the support that the Government have to draft amendments that are technically correct. I hoped that at least he would be prepared to accept that the Bill should refer to the need to ensure that the future ownership of the Tote was in the hands of an organisation whose first interest was to put the money back into racing and not of another organisation—some sort of milch cow—with the £14 million plus that has gone into racing going elsewhere. That was what I sought to achieve. Clearly I shall not do that this morning, so on this occasion, and because I want to return to the subject at a later date, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

James Paice: I beg to move amendment No. 33, in
clause 5, page 4, line 3, leave out from 'without' to end of line 3 and insert— 
 '(a) the consent of the Treasury and 
 (b) such disposal having been authorised by the Secretary of State by order by Statutory Instrument, which order shall 
not be made unless a draft of the order has been laid before, and approved by a resolution of each House of Parliament.'.

Jonathan Sayeed: With this it will be convenient to discuss amendment No. 5, in
clause 5, page 4, line 3, at end add 
 '; and such disposal shall be authorised by affirmative resolution of each House of Parliament.'.

James Paice: These amendments neatly follow the previous group, because they address the situation to which the hon. Member for Bath has just referred and require the sale arrangements that are finally decided to be the subject of an affirmative statutory instrument in the House of Commons The Minister's earlier comments showed clearly that the Government are determined to sell the Tote, and the Bill says nothing about who it should be sold to or the price mechanism for the sale. We shall discuss issues relating to the licence later.
 If the situation that the Minister described a few minutes ago were to come to pass and the sale to the racing trust fell through, or for one reason or another he did not believe that the racing trust was a valid purchaser—he stressed that it should not relate simply to the price being paid—he might want to sell the Tote to somebody else, or the Treasury might insist that it was sold to somebody else. I cannot stop that happening if it is not in the Bill. I am trying to ensure that, if that were the case, or in any situation, the Government should come back to the House of Commons with an affirmative statutory instrument, so that at least we would have a say in the matter. 
 As drafted, the amendments would also require an affirmative statutory instrument for a sale to the racing trust. That is fine. I would envisage a Committee 
 taking very few minutes to consider such a statutory instrument, but it is a particularly necessary belt-and-braces approach if the Bill is not to contain a number of the issues that it should contain in relation to both the price mechanism and the future owner. 
Mr. Foster rose—

Jonathan Sayeed: Order. I remind the hon. Gentleman that he is moving an amendment. I must put the Question before he can take an intervention.

James Paice: I stand corrected, Mr. Sayeed. Apparently I am not allowed to take an intervention.
 I believe that we need a belt-and-braces approach because, if the Minister had been prepared to accept separate amendments to constrain to whom and for how much the Tote should be sold and the length of the lease, it would be much less necessary to ask that the matter should be brought back to the House of Commons for an affirmative statutory instrument. However, the Minister has made it clear that he is not prepared to concede on these important matters, so it is even more important that the sale arrangements should be the subject of an affirmative statutory instrument.

Richard Caborn: I think that there was a little clever boxing around the clock. The hon. Member for Bath did not want to continue an intervention that he was not allowed to make because the amendment had not been moved.
 Amendment No. 33— 
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.